Monday, August 18, 2008

SAR #8231

The only 'free market' in America
is held in someone's driveway.

Bottoming: Ah, the real estate market is turning around. That's what the pundits say. Ought to tell Lehman Brothers, which is trying to sell its $40 billion in real estate holdings for $35 billion.

The Lost Nail: American shoppers have powered the economy for the last decade or more through borrowing, through debt. Refinancing overpriced houses, home equity loans, six year car loans, credit card debt. All that and more. The American way and standard of life is built on debt. But there's to be damned little debt extended for the near future; the horse is about to lose a shoe.

Score: While you were watching Michael Phelps win 8 golds, Merrill Lynch was busy losing $29 billion in its London office.

Contagion: Four of the worlds five largest economies - US, Europe, Japan and the UK - are in recession. Can China escape if their customers all collapse? The stock market in Zimbabwe continues to reach new highs.

Crime Doesn't Pays: Although charged with "multibillion-dollar consumer and securities fraud" and with overwhelming evidence proving it, Wachovia, JPMorgan, Morgan Stanley, UBS and others have gotten 'do-overs'. They buy back the auction-rate securities, pay minimum (and tax-deductible) fines of about one-half of one percent of the amounts involved, and promise not to get caught again.

Tit for Tat: If you have free will, so do the smallest particles of matter - or so some mathematicians at Princeton have chosen to prove. Makes the uncertainty principle a bit more principled.

Pudding's Proof: Some see the fall in the demand for oil and the consequent fall in the price per barrel as proof that there is no problem with our oil supply. But what if the fall in demand is 'demand destruction' due to the high price of oil due to demand exceeding supply (peak oil)? That would suggest that even a moderate up-tick in demand will once again speed the price upwards. And we are all familiar with the attention span of the average American when it comes to economizing.

Uncomfortable Truth: Mervyn King, Governor of the Bank of England, said yesterday that government authorities could do little to prevent a housing crash.

How Big Is 'Some': Big Oil's friends say one thing, the Greens something else. Congress wants to help, which is always dangerous. Does drilling here (off-shore) or there (ANWR) make sense? After a long and thorough review which finds some support for nearly all the views, the conclusion is: Yes, drilling OCS and ANWR would produce more oil. And no, the amount produced wouldn't amount to a hill of beans.;

Half-full Faith and Credit: Having the US bail out Fannie and Freddie is (a) socialism (b) fascism (c) necessary because the US needs foreigners to keep buying the GSE's debt. Okay, that was easy. Now explain why even with the 'full faith and credit' pledge behind Fannie and Freddie they still have to pay 215 baisis points over the yield on Treasuries.

The Oscar Goes... GM will not be advertising on the 2009 Acadamey Awards show. Or much of anywhere else, most likely; GM's $29 billion in bonds are now expected to be worth about 25 cents on the dollar when if GM defaults.

Porn O'Graph: Personal Savings Rate, Not .

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